Windows Vista Home Basic, $199/$99.95 (full/upgrade)Provides a basic platform for home users who want to keep tabs on email and Internet activity. Comes standard with Vista's new Search Explorer, Sidebar and Parental Controls.

According to Neowin, the RTM version of Vista will be available for MSDN
subscribers sometime after November 10, while businesses should begin receiving their copies on or shortly
after November 30. Vista will be launched into the retail sector on January 30, 2007.

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XP can be upgraded to Ultimate just the same as any other version of Vista.

Case in point: One of the things that the beta testers (like me) have been testing is the upgrade feature in the Vista installer. A few of the more experienced beta testers have gotten keys for multiple versions of Vista, but for the most part, since presumably Microsoft wants us to find the bugs in every feature, most beta testers have had access to only one of the versions: Windows Vista Ultimate.
Ant the upgrade process has been working fine through the development cycle for a while.... why would they now take it out?

Vista Ultimate has the same core as the rest of the versions of Vista... it's like the difference between XP Home, Pro, and MCE. All have the same core... it's the features that are different.
In the case of Vista, there are more versions, but how they did it remains the same... just the features outside the core of the operating system is changed... nothing internally, and the core is what makes the difference as far as upgrading is concerned...

If the core of the operating system was different, it would be far harder to put all three home versions of Vista (Home basic, Home Premium, and Ultimate) on a single DVD, with only the code you enter differentiating between verstions.
From what I understand, you could use a Vista Ultimate CD to install Home Basic, if you had a Home Basic key... or (somewhat more likely) you could install Ultimate from a Home Basic CD, if you had an Ultimate key.

They did it that way so that consumers could easily upgrade to a more advanced version of Vista if they wanted to... Need the MCE features but only have Home Basic? Go online and buy the upgrade key to Home Premium, enter it into Windows, insert your Vista Home Basic DVD so that it can copy the Home Premium files that it didn't copy before, and you're good to go.
Same with Ultimate.
Now why on earth (technologically) could you upgrade from XP to Vista Home (or Premium), and then upgrade to Ultimate, but not be able to go straight from XP to Ultimate?

Of course, even if the core was different, why would that even matter? When upgrading from Windows 2000, the XP installer just updated the system files, but when upgrading from a 9x OS (very different OS core), it pretty much threw out all the system files and started from scratch. Even if Vista Ultimate was different, why wouldn't M$ be able to do that again?

In short, there's no technological reason for them to have made it impossible to upgrade to Vista Ultimate... and they didn't.

Yeah, you're right; Microsoft had nothing better to do (and the time to do it, since you know Vista is ahead of schedule) than to create a completely different install for Vista Ultimate. Never mind that Microsoft has released information establishing the existence of a Vista Ultimate Upgrade SKU, you obviously know more than Microsoft about their product editions. </sarcasm>

Here's the break down on Vista upgrades:
+Products eligible for Vista upgrade pricing:
-Windows XP (all versions)
-Windows 2000 Professional (not sure about server versions)
+Upgrade details
-XP will be able to be upgraded to Vista
-Users of Win2k will be required to perform a clean install, even if they purchased the upgrade SKU

Break down of Vista Express Upgrade program:
XP Home -> Vista Home Basic
XP MCE -> Vista Home Premium
XP Pro -> Vista Business
XP Tablet -> Vista Business
There is no upgrade to Vista Ultimate through the Express Upgrade program because there is no comparable XP version.